In News:

• The World Trade Organization (WTO) has commended India’s liberalisedAuthorised Economic Operator (AEO) Programme for significantly enhancing the participation of micro, small, and medium enterprises (MSMEs) in global trade and for improving customs facilitation measures.
• The initiative, implemented by the Central Board of Indirect Taxes and Customs (CBIC), is increasingly being seen as a model for balancing trade facilitation with supply chain security.

About the AEO Programme

• Origin:The AEO Programme operates under the World Customs Organization’s (WCO) SAFE Framework of Standards to Secure and Facilitate Global Trade (SAFE FoS), adopted in June 2005 to strengthen global supply chain security.AEO constitutes one of the three key pillars of this framework.
• Implementation in India:
  • Introduced by CBIC as a pilot project in 2011 and revamped through Circular No. 33/2016-Customs (July 22, 2016).
  • Managed by the Directorate of International Customs (CBIC).
  • Aligns with Article 7.7 of the WTO Trade Facilitation Agreement (TFA), which promotes the recognition of “trusted traders.”

Objectives

• To enhance international supply chain security and ease of doing business.
• To foster trusted partnerships between Customs and compliant business entities.
• To reduce transaction costs and clearance times for legitimate traders.
• To increase MSME participation in international trade through simplified customs procedures.

Key Features

• Voluntary and Trust-Based:AEO is a voluntary compliance programme that certifies entities—such as importers, exporters, logistics providers, customs brokers, custodians, and warehouse operators—who meet security and legal standards.
• Three-Tier Certification:
  • AEO-T1, AEO-T2, and AEO-T3 for importers/exporters (in ascending order of benefits).
  • AEO-LO for logistics operators, custodians, and other intermediaries.
• Simplified Customs Procedures:
  • Reduced documentation requirements.
  • Decentralised approvals at the Customs Zonal level.
  • Segmented risk management—allowing Customs to focus on higher-risk consignments.
• Global Integration:
  • Mutual Recognition Arrangements (MRAs) with countries such as South Korea and Hong Kong.
  • Negotiations underway with the USA, UAE, and Taiwan for reciprocal recognition.
  • Ensures international credibility and cross-border facilitation for Indian traders.
• Targeted Expansion:The CBIC aims to accredit over 3,500 AEO-certified entities across India to build a more secure and efficient trade environment.

Benefits to Traders

Significance for India

• Supports MSMEs: Encourages smaller exporters and manufacturers to integrate with global value chains.
• Trade Facilitation: Reduces bureaucratic delays and improves India’s ranking in Ease of Doing Business and Logistics Performance Index.
• Customs Efficiency: Allows authorities to focus resources on non-compliant and high-risk traders.
• Global Credibility: Strengthens India’s image as a trusted trading partner under the WCO framework.
• Policy Alignment: Advances India’s commitments under the WTO Trade Facilitation Agreement.